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The Chinese EV Boom Is Proving Critical For Overall Tesla Sales

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Updated: 11 Jan 2022
  • Tesla sold a record 70,847 China-made vehicles in December
  • With more than half of Tesla's sales coming from the Chinese market, what effect will growing competition have?

Although Tesla (NASDAQ: TSLA) might be the current king of the EV rush, when the Chinese market is dominated by domestic brands; it’s worthwhile looking at Tesla’s position in the tightening landscape. Investors are more than aware of Tesla’s dominant market share, but some might not be aware of where a lot of these sales are coming from, and more importantly, whether they will last…

It’s not surprising that Tesla is currently standing as the only foreign EV manufacturer in the Chinese top 10. The well-established Chinese EV market has been blooming for some time, but with domestic brands like BYD and Wuling ruling the roost, and subsidized incentives forcing an edge on the Western market, investors should be fixed on Tesla’s ability to grow in such a lucrative, expanding space while facing off with domestic competition.

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Tesla sold 70,847 China-made vehicles this month with only 245 for export, marking the highest monthly manufacturing rate since Tesla’s Shanghai factory started whirring back in 2019. The December quota brings the total Chinese sales to more than 473,000, which interestingly, accounts for more than half of Tesla’s total sales in 2020. 

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What does this mean? Investors should be wary about Chinese domestic competition; sure, sales in December surged as Chinese citizens snapped up the subsidy before it changed in 2022, and Tesla is still a popular favorite. However as companies like BYD – which is already the largest EV manufacturer in China – continue to expand, Tesla’s Chinese sales might take a hit, and as more than half of 2021’s sales came from China, this has the potential to skew Tesla’s position.

 

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